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All too frequently we hear of major incidents where there has been loss of life, injury and considerable financial loss. This week it was the turn of Chevron’s refinery in Wales. Last year we had the big blow out in the Gulf Of Mexico with BP. These events often happen in the petrochemical industry – they also happen in many other industries where there is a big safety requirement – rail (Potters Bar), construction (Heathrow tunnel) to name a couple.

The reports emerge and there is often talk of ‘short cuts’ and process ignored. Without taking a moral stance, my question is simply this. Is good safety incompatible with high productivity? From what we read it would sometimes seem that the answer is yes. I believe the answer is absolutely not! Good safety is good for business and good for productivity.

First take a look at these regular incidents. If people were taking ‘short cuts’ then surely that is a sign that their processes were either inadequate or not optimised. I don’t for a minute believe that anyone really encourages unsafe practice. But most people want the job done. So at this point the issue is one of process. A lot of safety process is a ‘bolt on’. There is the work process and there is the safety process. Rightly or wrongly they are sometimes seen as different and not an integral whole. This presents a huge opportunity. Firstly, to integrate the process. Everything that is required for safe working needs to be fully integrated into a single ‘how we do this’ working practice. When this is the case, safety becomes inherent and is much more likely to become part of the culture of an organisation instead of being an enforced extra. In addition a single integrated process is much easier to optimise as part of a whole than as part of a separate process.

A dilemma that then arises is how exactly do you monitor a work process where the safety elements are integrated rather than as part of a separate process. The answer to that is twofold. Firstly, safety experts must be part of the process development. Their expertise and the necessary requirements need to be built into the core process. Secondly, ownership and oversight of the whole process should lie with the workforce not safety experts. This will probably require supervisors to have a greater awareness of, expertise in and commitment to safety. Surely this is no bad thing!

If we are to be really serious about safety and make the best of the overall process in terms of productivity, then those who do the work have to be accountable for the safety part of the process. The safety experts need to be involved when a working process is set up. They also need to be there to provide ongoing support and expertise, and they still need to have their functions of check and audit.

Much of this may not sound a lot different to today. It is! and it would make a big difference to performance both safety and business!

The UK National Health Service (NHS) is embarking on a major change. The key objectives are to improve the quality of care provided and at the same time deliver more for less. The plan is to transfer control of funding from Primary Care Trusts (PCTs, mostly run out of hospitals) to General Practitioner (GP) Consortia which are groups of local doctor practices. The big debate is whether this will deliver or be an abject failure. I am not going to go into the politics of this but rather look at some of the issues from a pure delivery perspective.

In order to do what they did, the PCTs needed a significant infrastructure to manage the financial and supply aspects of running a very large multibillion pound business. The GP consortia will be smaller and more of them, so their average size will be around half of a PCT. But they will still need to manage the process of ‘health care delivery’. So if the new approach is to work, I believe three things need to happen:

1. The management process will need to be more effective and the ‘bureaucracy’ that existed in the PCTs dismantled.
2. GPs will need to be very effective in their choice of care given such that it is both cost AND care effective (and efficient).
3. GPs will have to become business people as well as doctors.

This exercise is a huge transformation. It concerns over 1.4 million people employed by the NHS and countless others. How is it going to work?

One thing is sure, there will have to be massive change and things will have to be done differently. The same old mantra. Yet if all that happens is that bureaucrats are moved from a PCT to a GP consortium and many of the processes are also transferred, little is going to change. Perhaps the biggest obstacle is changing the culture of the NHS. How do you get 1.4 million people to be more focused on care and efficiency rather than management targets and cost shifting (from one centre to another – it happens a lot in hospitals. e.g if A&E can move a patient to a ward before X-Ray the cost of the X-Ray goes on the wards costs not A&E! – regardless of whether this is the best clinical result for the patient). So here are my tips for change that will improve the chances of a good result.

1. In setting up GP Consortia, they need to get an external view. Find people who have no NHS background, but do have a background in performance improvement and quality. This goes back to the old example of SouthWest Airlines seeking advice from Formula 1 car racing on vehicle turnaround!
2. Be real about what you are trying to do. There is a real need to cut cost and move more of the spend to patient care. This needs to be made very clear to everyone and not camouflaged as many politicians attempt to do.
3. Communicate. There are 1.4 million people to get through to. This will take an awful lot of communication and it will have to be repeated.
4. Lead from the front. GPs, the Consortia Managers and their teams will have to demonstrate their commitment to the principal objectives. If they don’t the whole process will fail.
5. Be clear about what is expected from everyone. The most important aspect of this is being clear about expected changes in behaviour. If behaviour does not change, little else will. Those 1.4 million staff need some very clear guidance on what behavioural change is expected of them. They also need to know that they will get help in making those changes.

There’s not really that much new here from many other major change programmes. The concern I have is that the NHS has tried to change before and little has worked. In large measure it is because they have not addressed the five topics above. I hope for all of us in the UK that there is success this time around!

The oil industry is fascinating for a number of reasons. The ‘Upstream’ or Exploration and Production part of the industry has little control over the price it receives for each barrel sold. Oil is a commodity and so its price is largely determined by supply and demand. In 1998 it fell as low as $10 a barrel. It has risen to over $140 and is currently about $125. How do you manage in such a volatile price regime and what does this mean in terms of productivity?

This is where it gets interesting. Whether $10 or $125 the industry – or at least the smart oil companies are always interested in doing more for less. In the tough times they need to reduce cost just to generate some cash and hopefully a bit of profit. In the good times it is all about getting more oil out of the ground to make more money whilst the price is high – for who knows when it could slump again. The focus is not quite the same in both situations – the first one is on cost cutting – the second on efficiency and effectiveness. However, from my experience of working in oil companies under both price regimes, the approach is fairly similar. If you try to cut cost, you will almost inevitably improve efficiency and if you are focused on improving efficiency you will end up reducing cost.

It is because of this price volatility that the oil industry has had to be flexible and willing to change. As an industry they still have some way to go, but they are working at it.

What makes them stand out is the determination to keep improving efficiency or cutting cost regardless of the cost/ profit environment. This is not to say that no other industry does this. On the contrary most successful organisations will have this mindset. The real message is that every organisation has to be relentless in bringing cost down and improving the way it does things. Even when business is good and you are getting a good price for your out put, seek to bring down price. This comes full circle to one of my earlier blogs about productivity culture. If your organisation does not have it – then go out and develop it!

As I watch a TV programme about some third world country, I am often taken aback by how much effort some people are prepared to put in for very little reward. You see very upsetting scenes of children and adults spending all day scouring a rubbish dump either for food or some scrap metal that they can sell. It is subsistence work. A huge amount of effort for barely enough reward to live off. In these countries it is a sad fact of life and one that is often hard to change.

Move west to an industrialised nation and here you have people working equally hard and some making millions od pounds a year. This is often enough to feed scores of people! However, what goes unnoticed in many organisations is a vast amount of effort for very little reward. In many areas of business, be it manufacturing or service there are loads of folk working hard and generating little reward for their employer. In the ‘Lean’ world of productivity these activities are referred to as non value adding. This is something that is part of a business process or value chain that does little or nothing to add value. For example take invoice approval. It is very important to make sure that an invoice is correct, the goods or services to be paid for have been delivered and the contract has been complied with. But how many people need to review and approve this? If, say five signatures are needed , how much value does each one add? What is the reward to the business for three of the five signatures? More for less is about removing all those activities that provide the business with little or no reward. In re-engineering a process each activity should be challenged in terms of the reward it brings for the effort applied. If the reward is too small either cut the activity out all together or find an alternative approach that involves less effort.

A simple principle but there is still far too much effort for little reward in both the public and private sectors. Both sectors are making more and better use of the ‘business case’ – identifying the financial benefit of taking a particular course of action. Perhaps there needs to be more business case analysis of effort that has little or in a lot of cases no reward. This, of course, is one of the principles of the ‘Lean’ approach. However, you do not need to be a Lean practitioner or a time and motion expert to ask the simple question – what is the reward for an activity and how much does the effort cost? The biggest hurdle to jump is breaking out from the in built inertia of an existing process and challenging activities that may have been in place for years.

A couple of examples from the public sector in the UK. The government has finally decided to look at national Insurance. Income tax by another name, but something that requires a huge effort from tax payer and taxman alike for no extra reward than if the same sum of money were to be recovered through an increase in income tax. The problem has always been historical inertia (and perhaps the idea that NI is not income tax, so like Mr Blair and co you can raise revenue without increasing tax?!). The other great example is car tax – the ‘Roadfund Licence’. Again lots of effort to collect and police this tax. Why not bin it and increase the petrol tax. People then pay on usage (fairer) AND a vast amount of extra income would be gained AND a huge amount of police effort would be better spent. Again, inertia seems to be the order of the day.

So get out there and start to challenge. Where is my organisation getting minimal reward for lots of effort?

In quite a few of my posts I have talked about the need to think differently, behave differently or simply do differently. Here’s a look at a different side of ‘different’. Talk to any manufacturing company and they will tell you the secret of high productivity and quality is high volume, repeatable processes and well trained people. In other words when you start to do the same thing over and over again, you get better at it! You do it faster and better. The other day I watched my daughter’s orthodontist apply the elastic bands to hold her new brace. He completed both upper and lower jaws in a time that would have me struggling to finish the first tooth. Then he told me he had done over 30,000 of them. So no wonder he is fast.

But today we have an issue. The wisdom is recognised, but many customers do not want to be the same as everyone else. How do we ‘make’ the same but make it different? Look at a couple of industries. Construction is one. Such is the congested nature of the UK that it is difficult for even a company like Sainsburys to build two identical stores. The size and shape will have to vary to match the available space. Think of going into a clothes store, find something you like, but not in a colour you like, because you want to be different. The manufacturer has a set range of colours – take it or leave it.

How can the supplier meet this need? There seem to be two answers. The first is to try to be as close to a ‘mass production’ factory as you can. Standardising process techniques and technology so that you get progressively better at whatever it is you do. There is a hospital in India that only does open heart surgery. It is now very, very good at this in terms of both cost and quality. But that is all they do. Another example is in some of the modern farming techniques and specialisms we have. Without them much of our meat and dairy produce would be substantially more expensive.

The second solution is to ‘move’ the factory as close to the customer as you can. An early adopter of this approach was Dulux with their in shop colour mixing, which has been available for years. Standard paint, but whatever colour you want. The construction industry is just beginning to take this on board more than it has done in the past. More precast concrete units, more factory based products. This increases the amount of logistics management needed in the industry, but so what if it creates a better more cost effective result. Another good example is insurance. The industry has recognised the need to standardise . The process (online) is the same for everyone, yet every policy is bespoke to a particular set of circumstances and can be sold and maintained much more cheaply than in the past.

These concepts are not new. However, I suspect that far too few people think this way at present. If someone wants something different, the belief is that it has to be ‘bespoke’ and attract the price and low productivity that goes with it.

Is your factory close to the customer, have you refined and specialised as much as you can?

How green is your business? Is going green a boon or a burden? A lot of received wisdom is that getting good environmental credentials costs money. Being environmentally friendly is expensive. But a little logic and research seems to say quite the opposite. There are an increasing number of organisations out there who, as a result of an overt ‘Green’ strategy, are saving big money. In addition they are boosting their Corporate Social Responsibility (CSR) credentials at the same time.

The logic appears almost trivial. Energy costs money, adopt energy-saving devices or policies you will save money. However, you only have to look at large office blocks, lights blazing at 2:00 a.m. to see that a lot of people have yet to grasp that particular piece of logic. The same with major equipment. Turn off copiers and printers and PCs and laptops and so on. Of course, for many companies this might be seen as a small amount of money to save. But it all adds up! I believe that adopting a philosophy that starts to address the energy issue can soon create a culture all about getting more with less.

There is a lot more than lighting and equipment that can and should be addressed. Take packaging for example. Whether supermarket meat or HD TVs, they all come with a lot of packaging that takes time to wrap and costs money. There are good reasons for some packaging, but think of the benefit in labour, time, money and carbon if it were to be sensibly reduced. Another example is warehousing. Warehouses cost money (and carbon) to build, use up land and have to be maintained. The more the world can move to a Just In Time (JIT) culture and philosophy, the more money can be saved through less warehousing.

Now here is an interesting thought. The UK and most other Western countries are drowning under an ever increasing pile of compliance and bureaucracy. All of this has to be dealt with. It comes at great cost and the added value of much of it is debatable. It also has a huge environmental cost. Think of the paper, energy, heat, time, and labour involved in dealing with compliance or bureaucracy. Governments need to be pushed really hard to justify their compliance legislation and bureaucracy if for no other reason than the cost to the planet!

One of the fundamentals of any process re-engineering in any business is to reduce idle time or non value adding time. Taking a green approach to this can force change that will not only reduce non value adding time, it will result in significant financial and carbon gain, because of energy that is no longer wasted – for one thing.

So the message is clear. When seeking to do more with less, make sure you also seek to improve your ‘green credentials’ at the same time. Not only will this probably increase the financial benefit, but you will save carbon and be seen by your customers to be doing the right thing!

Most of us can remember a scene similar to this: the good guy is being chased by a bunch of very bad guys. He turns down a dark alley hoping to escape their attention. He runs to the end of the alley. High walls, no ladder, no way out and here come the bad guys. How does he escape? Well, he either does something quite remarkable or he is captured!

There are large parts of the business world already in a similar sort of trap. Take a food manufacturing for example. Commodity prices have been rising dramatically of the last year or so. The supermarkets that sell their products want to keep prices down. The food manufacturers have done all they can to improve and raise productivity in the factory. However there is little they can do when raw commodity prices rise by 25% or 50% or even higher. They feel very stuck. In many cases you will have seen the size of the product fall in order to keep the price constant. Cadbury’s milk chocolate, Maltesers and Tropicana to name but three (and probably Mars Bars too!). This is understandable but no solution. Over time we could end up paying something for nothing!

What to do? Indiana Jones was always getting trapped and of course he always escaped just in time. But his means of escape usually involved something out of the ordinary that required a major leap in thinking and action.

Productivity growth, like evolution is usually incremental. It nevertheless delivers great results for a great many organisations. But sometimes you get trapped and have to make a quantum leap to get out. You have to do something very different, which may even mean destroying all or part of where you are today. It actually happens all the time. For example, moving manufacturing to China, outsourcing, call centres in India are just a few cases over the last 15 years where there has been a major shift in thinking to deliver reduced cost (but not always better productivity).

I am no expert in food manufacturing, but if the western world wants to keep prices down then something very different will have to happen. As demand for meat and dairy products rises in the east so will competition and therefore prices for these products grow. Intensive farming as we know may have run its path and got into the cul de sac. Now is the time to really be thinking differently (and maybe they are, but it’s just too secret at the moment!).

Something similar may be happening in your organisation. Are you really thinking about extreme alternatives? The need applies just as much to the public sector as anywhere. I read that George Osborne is thinking of merging National Insurance and Income tax at the next UK budget. Well about time. A major leap in thinking and not that hard to implement. But it does mean dumping a lot that has been held dear to government over the years.

In the current economic situation, there is no more important time to think very differently and be prepared to change even the most sacred of cows! What has your organisation done?